Alphabet and Amazon spent $127 billion on capex in one quarter. Wall Street punished one far harder
Alphabet's free cash flow turned negative again and Amazon's trailing figure hit negative $42.4 billion. A 3 percent search miss, not the spending, separated the stock reactions.
By Priya Kanth, Business & Economy
· 3 min read
Key takeaways
- •Alphabet and Amazon reported a combined $127.3 billion of third quarter capex, on different definitions.
- •Alphabet's quarterly free cash flow was about negative $9.1 billion; Amazon's trailing twelve month figure is negative $42.4 billion.
- •Alphabet fell 12.64 percent after a roughly 3 percent search revenue miss; Amazon fell 4.25 percent after a 0.1 percent revenue miss.
- •AWS reports a $578 billion backlog; the claim that spending pays off is a forecast, not a result.
$127.3 billion. That is what Alphabet and Amazon reported spending on capital expenditures in the third quarter, $51.4 billion at Alphabet and $75.9 billion in cash capex at Amazon. Both reported earnings on October 28 and 29. Alphabet's stock fell 12.64 percent the next day. Amazon's fell 4.25 percent in regular trading.
The short answer
Alphabet's free cash flow was about negative $9.1 billion in the quarter, its second straight loss. Amazon's trailing twelve month free cash flow is negative $42.4 billion, against positive $14.7 billion a year earlier. Both companies are spending more on AI data centers than their operations generate, and investors punished the one whose core business also missed.
-$42.4B
Amazon trailing twelve month free cash flow
A year earlier it was positive $14.7 billion. Amazon still expects about $220 billion in 2026 cash capex.
Two companies, two different quarters
Alphabet's quarter had a strong half and a weak half. Google Cloud revenue rose 103 percent to $30.7 billion from $15.2 billion a year earlier. Search revenue grew 12 percent to about $63 billion, short of the roughly $65 billion Wall Street expected, according to Yahoo Finance. Capex of $51.4 billion compares with $24 billion in the same quarter last year, the Motley Fool reported.
Amazon's miss was narrow. Revenue came in at $201.9 billion against a $202.1 billion forecast, a shortfall of about 0.1 percent, and earnings per share were $1.89 against $1.96, Investing.com reported. AWS revenue grew 39 percent to $46 billion with $17.8 billion of operating income, Constellation Research reported.
The gap in the stock reactions tracks the gap in the misses. Alphabet missed by roughly 3 percent on the line that funds everything else, search. Amazon missed by a rounding error and pointed to growth in the segment that takes the spending. That is this reporter's reading of the numbers, not a finding from either company. Amazon also fell another 6.11 percent after hours, to $228.90, so the cushion was thin.
What the spending is buying
AWS reported a backlog of $578 billion, which CEO Andy Jassy said is growing at triple digit rates year over year. That is the case for the spending: contracts already signed that the new capacity will serve. Jassy told analysts, "We believe that AWS can grow north of 40% in each of 2027 and in 2028."
The case against sits in the cash flow statement. Pivotal Research CEO Jeffrey Wlodarczak said bears will argue AI is "starting to seriously hurt their search business," a point about Alphabet's core revenue rather than its cloud unit. CFRA analyst Angelo Zino took the other side, saying the pullback "probably represents a buying opportunity." Both are forecasts. Neither is a reported result.
Who wins and who loses
Alphabet lost about $482 billion in market value on October 29, by Yahoo Finance's calculation. That is the second largest one day loss for a U.S. listed company, behind the roughly $593 billion Nvidia lost on January 27, 2025. Alphabet's previous record dollar loss was about $275 billion on July 23, and its market value is down about $1.4 trillion from its May peak.
Amazon said 2027 capex will be meaningfully higher than the roughly $220 billion planned for 2026. That means the cash flow gap is guided to widen, not close, before the AWS backlog converts to revenue.
Two limits apply. The two capex figures are not like for like: Amazon's is a cash figure, and Alphabet's definition was not itemized in the sources reviewed. And this story runs on secondary reporting, because Amazon's and Alphabet's own filings could not be retrieved when it was written. The base rate is unusual either way: Yahoo Finance counts 18 or 19 sessions this year in which U.S. stocks shed $200 billion or more in a single day.
Sources
- 01Alphabet loses $482 billion in market value, the biggest drop in its history, Yahoo Financefinance.yahoo.com
- 02Alphabet sheds $500 billion in a single day despite cloud growth of 103%, The Motley Foolfool.com
- 03AWS Q3 revenue growth surges 39%, capex stings Amazon's cash flow, Constellation Researchconstellationr.com
- 04Amazon Q3 2026 earnings call transcript, Investing.cominvesting.com
Corrections
No corrections have been made to this article.
About the reporter
Senior Business & Economy Reporter, Trestlewire
I was an equity research analyst for five years and have been a financial reporter since 2000. I covered the end of the dot-com bubble from a markets desk, spent the autumn of 2008 reading bank filings at two in the morning in Chicago, and have written about every Federal Reserve rate cycle since. The lesson from all of it is short: the number comes first, and the story is the explanation for the number.
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